£30,000 savings, dunno what to do with it!

pharmice

Hello people,

I left my job a few months ago, currently a full-time post grad student. I have £30k saved up from my previous earnings, and I'm keen to invest in a relatively safe investment that gives a monthly return. I already own my home on a mortgage with less than £27k left on it.

Any advice please?!

jimjames

You can put £15k in a S&S ISA now and remainder in after April. That assumes you already have a suitable emergency fund elsewhere. Then choose whatever investment matches your risk requirements

pharmice

jimjames wrote: »

You can put £15k in a S&S ISA now and remainder in after April. That assumes you already have a suitable emergency fund elsewhere. Then choose whatever investment matches your risk requirements

Thanks.

Is there a monthly return with that?

badger09

pharmice wrote: »

Hello people,

I left my job a few months ago, currently a full-time post grad student. I have £30k saved up from my previous earnings, and I'm keen to invest in a relatively safe investment that gives a monthly return. I already own my home on a mortgage with less than £27k left on it.

Any advice please?!

Do you mean invest? Usually invest = long term, minimum 5 years but more likely 10, 15, 20 etc where your capital is at risk

Or save? eg in a bank or building society, where your capital (up to £85k per institution) is guaranteed

xylophone

Do you have an emergency fund?

If not, consider interest paying current accounts as a first step.

http://www.moneysavingexpert.com/savings/savings-loophole

With regard to whether there can be a monthly return from a stocks and shares ISA, assuming you mean a monthly income, there can be if you choose investments which pay one.

Some examples here
http://www.thisismoney.co.uk/money/diyinvesting/article-1616089/ISA-INVESTING-TIPS-Fund-trust-ideas-income-investors.html

Eddystone

First you do not own you home the bank/building soc does,i know rates are low but why not pay the mortgage off and sraightaway you have that money to do what you want with eg cash isa or whatever plus you do not have to think what may happen if for some reason you could not work.

Pincher

I got the biggest mortgage I could get my hands on, years BEFORE I was made redundant. The idea was to get a house with extra rooms that I could rent out. The redundancy package included £3,500 re-training budget, which I used towards an MSc.

The really funky part was, I was living in halls of residence, for £55 a week, so I rented out my room in London for £100 a week, on top of the other rooms. I was commuting back to London with EasyJet some weekends, for ~£30, return. Well, airport parking for the weekend in Edinburgh was quite expensive.

Not that I was counting pennies, but I think student union beer and commissary food was saving on cost of living for the year.

So, if you had planned ahead, and re-mortgaged for say £100k, at ~2%, your interest outgoing is £2,000 a year, but you can get £7,500 Rent-A-Room TAX FREE from renting room(s) out: AND you would have ~£100k to do whatever.

CapricornLass

I also think it might be a good idea to pay off the mortgage. You're likely to be paying more in interest on the mortgage than you will ever get from a monthly income on that sum of money. I don't know what you are paying on your mortgage each month, but if you promptly put that money you are payinginto an ISA, whether that is cash, stocks and shares or a mixture of the two, then the chances are that you will rebuild your savings fairly quickly.

Whatever is left, treat as your emergency fund, and put into one of the interest paying current accounts

DiggerUK

I get dumbfounded at peoples attitude, when they don't get rid of debt; and paying off the mortgage will secure the roof over your head forever.
You will instantly get the mortgage payments converted in to a monthly 'income' by not paying it in the first place.

Then go away for a holiday, relax, and come up with a few ideas of how to organise your future finances..._

skr80

I would pay off the mortgage so that you DO own your own home, then look to put the 3k wherever you wish, supplementing it with whatever your old mortgage payments were?

martinsurrey

DiggerUK wrote: »

I get dumbfounded at peoples attitude, when they don't get rid of debt; and paying off the mortgage will secure the roof over your head forever.
You will instantly get the mortgage payments converted in to a monthly 'income' by not paying it in the first place.

Then go away for a holiday, relax, and come up with a few ideas of how to organise your future finances..._

If you had the choice of a 5 year fix in 2012 for £200k at 2.78% or being mortgage free, which would have been better?

Assume a higher rate tax payer.

HSBC FTSE 250 acc tracker index C is up 86% in 5 years.

So your £200k has moved to £372k, tax on £172k is £70k, so in your pocket you have £302k

At 2.78% you will have paid about £6k interest per year (lets not get too caught up in repayments), so £30k in interest.

Not taking out the mortgage "cost you" £70k after tax, over a tracker.

The tracker went over the 25% return mark (the point required for break even over the mortgage) in 1 year, and hasn't traded below that level since.

People invest over repaying the mortgage because long term investing almost always beats mortgage rates (if you take long term to long enough), so if you can ride out the troughs, you can cash in on the long term.

Its down to personal risk appetite.